Economists predicted that December would see nearly 200,000 new jobs, but reality was ... unexpected. Just 74,000 jobs were created last month. The headline unemployment rate dropped from 7.0% to 6.7%, but -- and it's a big but -- this was almost entirely attributable to the 525,000 people who left the workforce. Just 62.8% of Americans were part of the labor force, tied for the lowest rate since 1978, and nearly 92 million people aren't in the labor force. For the year, unemployment dropped 1.2 percentage points, but real unemployment is at least 13.1% and, again, we'd point to the 2.9 million Americans who left the labor force in 2013 as the reason. By the way, we're entering year six of the Obama "recovery."

Non-farm payrolls increased 74,000 in December, well below the consensus expected 197,000. Including upward revisions to prior months, nonfarm payrolls were up 112,000.

Private sector payrolls increased 87,000 in December (+120,000 including revisions to prior months), lagging the consensus expected 200,000. The largest gains were for retail (+55,000) and temps (+40,000). The largest decline was for non-residential construction (-22,000). Government payrolls declined 13,000.

Average weekly earnings – cash earnings, excluding benefits – increased 0.1% in December and are up 1.8% from a year ago.

Implications: The labor market surprised to the downside in December, with slower growth in payrolls, a decline in total hours worked, and only a small increase in wages that likely lagged inflation for the month. Payrolls increased 74,000 versus a consensus expected 197,000 (First Trust was forecasting a comparatively low 150,000). However, this does not mean the jobs recovery is over. Payroll growth was stronger than originally expected in August, September, October, and November, so getting one month to the downside does not make a new trend. In addition, the Labor Department says 273,000 workers were unemployed in December due to unusually severe weather in the survey week. This is the most for any December since 1977. For comparison, in the past ten years, on average, 138,000 workers have been out of work due to weather in December. These figures are from the civilian employment survey, not the payroll survey, but hint at a sharp rebound in job growth in January. Despite the weather issue, civilian employment was up 143,000 in December. It’s early, but we expect payrolls to grow roughly 200,000 in January. Also, don’t be surprised if December payrolls are revised up next month; December 2012 was originally reported at 155,000 and later revised to 219,000. The bright spot in today’s report was the decline in the jobless rate to 6.7%. However, much of the decline was due to a drop in labor force participation. Most of the drop in the jobless rate in the past year is due to job growth, but some of it is due to lower participation. In terms of the details of the report, although total hours were down in December and average hourly earnings only rose 0.1%, they are up a combined 3.4% versus a year ago, which means consumer incomes are still rising. This is more than enough for workers to keep pushing up spending, particularly in an environment where consumers’ financial obligations are low relative to income. The labor market could and would be doing better with a better set of public policies. But it is still improving. In the past year nonfarm payrolls have grown at an average monthly rate of 182,000 while civilian employment is up 96,000 per month. Over time, we expect these two rates of job growth to converge and think the pace of growth in civilian employment is likely to accelerate.________________________________________

Industrial production increased 0.3% in December, matching consensus expectations, but was up 0.5% including revisions to prior months. Production is up 3.7% in the past year.Manufacturing, which excludes mining/utilities, rose 0.4% in December (+0.6% including revisions to prior months). Auto production rose 1.6% in December, while non-auto manufacturing was up 0.3%. Auto production is up 7.2% versus a year ago while non-auto manufacturing is up 2.2%.The production of high-tech equipment rose 1.7% in December, and is up 9.9% versus a year ago.Overall capacity utilization rose to 79.2% in December from 79.1% in November. Manufacturing capacity increased to 77.2% in December.

Implications: The plow horse economy is starting to trot. Another strong report today on industrial production, which reached a new all-time high in December. Production rose 0.3% for the month and an even stronger 0.5% including revisions to prior months. Taking out mining and utilities gives us manufacturing, which was up 0.4% in December and up 2.8% in the past year. Auto production was up 1.6% in December, but even non-auto manufacturing was up 0.3%. We expect continued gains in production as the housing recovery is still young and demand for autos and other durables remains strong. Over the past year, production in the auto sector has expanded by 7.2%. Excluding autos, manufacturing output is up 2.2% in the past year and 6.0% at an annual rate in the past three months. We expect the growth gap between auto and non-auto manufacturing to narrow substantially in the year ahead, with slower growth (but still growth!) in autos and faster growth elsewhere in manufacturing. Capacity utilization rose to 79.2% in December. This is a new high for the recovery and above the average of 78.9% in the past 20 years. As a result, further gains in production in the year ahead should push capacity use higher, which means companies will have an increasing incentive to build out plants and equipment. Meanwhile, corporate profits and cash on the balance sheet are at record highs, showing companies have the ability to make these investments.

I haven't paid attention to Isis in years. I remember when anti- sense was all the rage late 90's. Then fell out of favor after it didn't work. I recall posts on the old DMG board on this. Now look at it. Hindsight is everything in the stock market. I recall my uncle telling us the story of how his friends advised him to buy into resorts international in the 70's which was the first Atlantic City casino approved by the regulators. He thought it too risky. His friends made millions. He then added, "everything I did in the stock market was wrong...."

I am not sure if I every bought ISIS but I know I watched it for years. I look at this and weep:

Yes the economy is improving for the few, and not the wealthy. Like Forbes said, my father taught me one can make far more money recommending stocks than investing in them. Wesbury knows he can make far more money giving advice than following it.

In health care the big businesses are getting wealthy. There is huge consolidation, huge squeezing of smaller guys and increased demands on all the workers. I believe it is the same every other segments of the economy. I don't recall in my lifetime seeing the gap from the very rich to the vast majority of Americans expanding any faster as it has under this President.

Yet the Republicans seem totally unable to articulate any consistent messages to reach those same "vast majority of Americans". The ineptitude of the Republican leadership (in what is not any longer my party) is breathtaking.

I have no motivation to vote. Why bother? Should I vote for the big government Republican or the outright liberal? Little difference. They are all giving the citizens country away.

Victor David Hanson was on Marc Levin last PM. He more or less agreed the immigration cave in is quite likely the end of the ball game for America as we knew it. He doesn't understand why Republicans cannot reach out to the majority of citizens and connect.

All I can say is many talk show hosts blow away any political articulators in the repub leadership.

As of now I will stay home and not vote period. I didn't bother to vote for Christie either. I don't like him and he has done nothing for me or the bill payers in NJ - nothing.

Inadvertently, we previously sent out an earlier version of this week’s Monday Morning Outlook. Below is the updated version:What happened to stocks in January and early February is nothing new. It’s happened quite a few times in the past four years and eleven months. Ever since mark-to-market accounting was fixed in March/April 2009, these corrections have been short-lived and relatively mild. And once they were over the market went higher. It’s been a very strong bull market.

Nonetheless, few investors truly understand why things turned around so abruptly in 2009 and every time the stock market declines there is a mad rush to believe this time the sky really is falling.

A key reason for this belief is that conventional wisdom has coalesced around a relatively simple-minded narrative that goes like this – “the economy died in 2008 and Quantitative Easing (QE) is the life support system…it’s a false recovery, a sugar high…without QE, the markets would not be up.”

We think this narrative has it wrong… it’s mistaken.

First of all, the entire subprime crisis was only about $400 or $500 billion dollars of bad loans. Yes, those are large numbers, but in an economy that was producing $15 trillion of GDP each year, it’s just not enough to cause a cataclysm.

Rather, it was an accounting rule – mark-to-market accounting – that created losses for financial institutions well in excess of the true problems in the housing market. This rule forced financial firms to sell mortgage-related assets into a fire sale, markets became illiquid, and prices fell to levels well below fundamental value. Without mark-to-market accounting the crisis would have remained contained.

We’re not saying firms should never mark assets to market. The rule makes sense when firms are always ready to sell an asset. But the rule makes no sense at all when markets seize up and no sane owner would sell an asset (that is still performing) for a price massively below its true value; unless an accounting rule forced it. If in the absence of the rule, asset owners could or would just wait out the storm then the only justification for marking an asset down in value is if it is truly credit impaired.But instead of fixing the overly rigid accounting rule, the US government invented policies – TARP and QE were the big ones – to fill the hole in bank capital caused by mark-to-market losses. Both TARP and QE started in October 2008 and the stock market promptly plummeted – falling an additional 40%, with financial stocks down significantly more than the market as a whole.

Only after Barney Frank and the House Banking Committee leaned on the Financial Accounting Standards Board to fix mark-to-market did things turn around. A hearing was announced on March 9, 2009, the exact day the market hit bottom. The rule wasn’t officially changed until early April 2009, but by then markets had already anticipated the change. It was the change in this rule that stopped the crisis, not TARP and QE.

Our main point is that the crisis was never actually as bad as many thought. The bubble wasn’t as big as many Austrian economists think. Once the accounting rule was changed, the recovery was virtually guaranteed. TARP and QE didn’t “save” the economy and “tapering” is not dangerous. The odds of a return of the crisis are virtually nil.The economy, profits and stock prices are rising because of “real” economic developments – fracking, new computer software, and communication technologies are raising energy production and productivity, which, in turn, are driving growth. Yes, the economy could be doing even better, but we shouldn’t ignore real improvements either.The bottom line is that while so many people view the recovery as fragile and fake, they are missing the important narrative outlined above. The economy and markets are so much more robust than the conventional wisdom believes. So, when markets fall and fear overwhelms so many because they believe the wrong narrative, opportunity abounds for the bulls.===========================

This analysis is not without logic. I would add that adding to the gravity of the decline was the market anticipating Obama's cap & trade and other stupidities and when they floundered without getting anywhere, the portion of the decline due to them reversed itself. I would also add that BW's analysis is quite incomplete e.g. the implications of declining work force, Obamacare, extreme accumulation of debt, various demographic issues and their related unfunded liabilities, increasingly hostile tax code and regulatory environment, the general misinformed level of the American people due to the Pravdas, and much more.

Obviously, this doesn't mean the market will continue to behave as it has - but as the author points out, many who were laughing at this chart last November are no longer doing so. Wesbury is a fool, in my humble opinion.

Well, we here who have predicted doom and gloom since the DOW was at 6500 have much about which to be humble. This thread is, in part about the stock market, and in that game score is kept by making money. Speaking proportionately, BW is WAY ahead of all of us here by that criterion.

Good point, G M - Also, I must say it escapes me how so many take the attitude that they will continue to gamble in the face of all this reality staring them in the face. Yes - we've had a big run-up in the market - but based upon exactly WHAT fundamentals? There aren't any to speak of. That this increase has been driven by factors other than increased productivity and profitability SHOULD give anyone pause. Expecting that there will be some sort of warning signal which will give one time to exit the market safely is patently ridiculous, and ought to be evident to anyone with a modicum of knowledge about the market and its history.

Plenty of fools (though not nearly so many as today) kept investing in the market prior to the crash in 1929, and I'm sure they were scoffing at naysayers back then as well.

Logged

"You have enemies? Good. That means that you have stood up for something, sometime in your life." - Winston Churchill.

***From what we have seen–the fixing of the LIBOR rate, the London gold price, foreign exchange rates, the price of bonds and the manipulation of gold and stock market futures prices–we don’t know what the limit is to the ability of the Fed, the Treasury, the Plunge Protection Team, the Exchange Stabilization Fund, and the banks to manipulate the markets.***

Has this ever been the case in American history where in a Fed can control the markets like they are doing?

In two recent articles we explained the hows and whys of gold price manipulation. The manipulations are becoming more and more blatant. On February 6 the prices of gold and stock market futures were simultaneously manipulated.

On several recent occasions gold has attempted to push through the $1,270 per ounce price. If the gold price rises beyond this level, it would trigger a flood of short-covering by the hedge funds who are “piggy-backing” on the bullion banks’ manipulation of gold. The purchases by the hedge funds in order to cover their short positions would drive the gold price higher.

With pressure being exerted by tight supplies of physical gold bars available for delivery to China, the Fed is growing more desperate to keep a lid on the price of gold. The recent large decline in the stock market threatened the Fed’s policy of taking pressure off the dollar by cutting back bond purchases and reducing the amount of debt monetization.

Thursday, February 6, provided a clear picture of how the Fed protects its policy by manipulating the gold and stock markets. Gold started to move higher the night before as the Asian markets opened for trading. Gold rose steadily from $1254 up to a high of $1267 per ounce right after the Comex opened (8:20 a.m. NY time). The spike up at the open of the Comex reflected a rush of short-covering, and the stock market futures looked like they were about to turn negative on the day. However, starting at 8:50 a.m., here’s what happened with Comex futures and S&P 500 stock futures:

At 8:50 a.m. NY time (the graph time-scale is Denver time), 3,225 contracts hit the Comex floor. During the course of the previous 14 hours and 50 minutes of trading, about 76,000 total April contracts had traded (Globex computer system + Comex floor), less than an average of 85 contracts per minute. The 3,225 futures contracts sold in one minute caused a $15 dollar decline in the price of gold. At the same time, the stock market futures mysteriously spiked higher:

As you can see from the graphs, gold was forced lower while the stock market futures were forced higher. There was no apparent news or market events that would have triggered this type of reaction in either the gold or stock market. If anything, the trade deficit report, which showed a higher than expected trade deficit for December, should have been mildly bullish for gold and bearish for the stock market. Furthermore, at the same time that gold was being forced lower on the Comex, the U.S. dollar index experienced a sharp drop in price and traded below the 81 level of support. The fall in the dollar is normally bullish for gold.

The economy is getting weaker. Fed policy is obviously failing despite recent official pronouncements that the economy is improving and that Bernanke’s monetary policies succeeded. A just published study by Jing Cynthia Wu and Fan Dora Zia concludes that the the positive impact of the Federal Reserve’s policy of quantitative easing is so slight as to be insignificant. The multi-trillion dollar expansion in the Federal Reserve’s balance sheet lowered the unemployment rate by little more than two-tenths of one percent, raised the industrial production index by 2 percent, and brought about a mere 34,000 housing starts. http://econweb.ucsd.edu/~faxia/pdfs/JMP.pdf [3]

The renewal of the battle over the debt ceiling limit is bullish for gold and bearish for stocks. However, with the ongoing manipulation of the gold price and stock averages via gold and stock market futures, the normal workings of markets that establish true values are disrupted.

A rising problem for the manipulators is that the West is running low on gold available for delivery to China and other Asian buyers. In January China took delivery of a record amount of gold. China has been closed since last Friday in observance of the Chinese New Year. As China resumes purchases, default on delivery moves closer.

One way for the Fed and bullion banks to hold off defaulting on Chinese purchases is to coerce holders of gold futures contracts to settle in cash, not in delivery of gold, by driving down the price during heavy Comex delivery periods. This is what likely occurred on Feb. 6 in addition to the Fed’s routine price maintenance of gold.

As of Thurday’s (Feb. 6) Comex report for Wednesday’s (Feb. 5) close, there were about 616,000 ounces of gold available to be delivered from Comex vaults for February contracts totaling slightly more than 400,000 ounces, of which delivery notices for 100,000 ounces were given last Wednesday night. If the holders of the other 300,000 contracts opt to take delivery instead of cash settlement, February contracts would absorb two-thirds of Comex gold available for delivery.

The Comex gold inventory has been a big source of gold shipments from the West to the East, resulting in a decline of the Comex gold inventory by over 4 million ounces–113 tonnes–during the course of 2013. We know from reports from Swiss bar refiners that the 100 ounce Comex gold bars are being received by these refiners and recast into the kilo bars that the Chinese prefer and shipped to Hong Kong. With the amount of physical gold in Comex vaults rapidly being removed, the Fed/bullion banks use market ambush tactics such as those we describe above to augment and conserve the supply of gold available for delivery.

Readers have asked if gold can continue to be shorted on the Comex once no gold is left for delivery. From what we have seen–the fixing of the LIBOR rate, the London gold price, foreign exchange rates, the price of bonds and the manipulation of gold and stock market futures prices–we don’t know what the limit is to the ability of the Fed, the Treasury, the Plunge Protection Team, the Exchange Stabilization Fund, and the banks to manipulate the markets.

Paul Craig Roberts [ email him ] was Assistant Secretary of the Treasury during President Reagan's first term. He was Associate Editor of the Wall Street Journal . He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand. He is the author of Supply-Side Revolution : An Insider's Account of Policymaking in Washington ; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy , and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice . Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.

Got love it. Coming from a Columbia economist. I don't which is worse - Princeton or Columbia.

"Yes, the U.S. has structural problems with its welfare programs, its income distribution is unacceptably skewed and its birth rates are falling. But all that is widely known and is part of a lively public policy debate. Therefore, I see no point of harping on these issues just to find something to be down on the U.S. economy."

If the economy is so good how about a tax break for those of us who are paying all your cronies bills:

While operating more than an entire percentage point below its potential growth rate, the U.S. economy still raised its business sector employment by nearly 2 million people over the last twelve months.

That is a remarkable achievement because companies usually don't step up hiring until a sustained increase in capacity pressures them to start adding to their labor force.

(Read more: Wicked winter puts big chill on job creation)

And no other economy contributed last year 4.1 percent of its gross domestic product (GDP) to the rest of the world. Those in the emerging markets, who are now complaining about declining dollar liquidity, may also wish to note that the U.S. last year bought from them $515 billion more than it sold to them.

Based on current growth dynamics, this year promises an even better outlook for employment creation and America's contribution to the world economy.

Play Video

Positive on US economy: Julius Baer

Mark Matthews, Head of Research Asia, Bank Julius Baer, explains why he thinks the U.S. economy is seeing recovery and will continue to improve with the Fed's tapering.

The most recent evidence from survey data indicates that the U.S. service sector (approximately 90 percent of the economy) continues to expand in a steady and sustained fashion. Despite recent distortions caused by bad weather, the same is true of the manufacturing industries, where the capacity utilization rate is approaching its long-term average of 80 percent.

The U.S. economy is underpinned by growing real incomes, increasing employment, record-low borrowing costs and an easing access to credit facilities as banks continue to open up their channels of consumer financing.

Balanced policy mix

All these developments are taking place in the context of an appropriately supportive policy mix, where the tightening fiscal policy is offset by an expansionary credit stance.

(Read more: Economy takes $50B winter weather hit: CNBC survey)

That policy configuration has allowed the U.S. to achieve a relatively fast and substantial fiscal consolidation in an environment of a growing economy. Indeed, this year's budget deficit is expected to come in at 3 percent of GDP and to decline 24 percent from the previous fiscal year – a feast that euro area austerity advocates can only dream about.

The Treasury's declining borrowing requirements are making it possible for the U.S. Federal Reserve (Fed) not only to safely scale back its monthly asset purchases, but also to maintain its highly accommodative policy stance to compensate for the falling public sector outlays.

Here are some numbers to illustrate the point: in the course of December and January, the Fed's balance sheet expanded by a monthly average of only $22 billion – a huge drop from a monthly average of $98.8 billion in the previous two months.

(Read more: US economy may be stuck in slow lane for long run)

The Fed did that without creating any adverse effects in bond and mortgage markets. Last Friday, for example, the yield on the benchmark ten-year Treasury note traded at 2.74 percent, compared with 2.84 percent in the early December of last year. Mortgage costs followed the same pattern.

The rate on the 30-year fixed mortgage was 4.32 percent last Friday, down from 4.41 percent a month ago and 4.46 percent in December.

This is encouraging, and we may soon begin to see a gradual shrinking of the Fed's $3.7 trillion balance sheet. The Fed will, however, maintain its easy credit stance as long as the inflation pressures are kept at bay by the prevailing slack in labor and product markets.

At the moment, there are no reasons to worry about rising inflation expectations. Unit labor costs in the fourth quarter declined 1.6 percent from the year earlier as a result of strong productivity gains and weak wage increases. For last year as a whole, unit labor costs rose only 0.8 percent.

More of the same can be expected in the months ahead because, even under conditions of modest economic activity, a slow take up of the labor market slack will lead to productivity growth that will offset most of the underlying wage gains of about 2 percent.

The Fed's recent statements show that they are well aware of that. The U.S. monetary authorities are not fooled by a surprisingly fast decline of the unemployment rate. They know that the actual jobless rate last month was double the officially reported rate of 6.6 percent – if one adds to the unemployment rolls involuntary part-time workers and people marginally attached to the labor force.

The Treasury and the Fed are also turning their attention to the external demand for American goods and services.

(Read more: Janet Yellen is NOT Ben Bernanke)

Worrying about one-fifth of U.S. exports that go to Europe, Washington wants to see more supportive economic policies in the recession-ridden euro area. The focus is now on Germany, which is seen as holding back the euro zone growth with its staggering current account surplus of 7 percent of GDP.

The U.S. has less of a case against China. The Chinese current account surplus is below 2 percent of GDP, growth is increasingly led by domestic demand, China's imports are growing at a rate of 10 percent or more, and the yuan's exchange rate is being forced up by capital inflows Beijing finds increasingly difficult to control.

All this will be part of the next meeting of the G20 finance ministers and central bank governors in Sydney, Australia on February 20-22, 2014.

Based on this analysis, I remain optimistic about the U.S. economic outlook.

(Read more: Bad jobs reports won't change tapering: Yellen)

Yes, the U.S. has structural problems with its welfare programs, its income distribution is unacceptably skewed and its birth rates are falling. But all that is widely known and is part of a lively public policy debate. Therefore, I see no point of harping on these issues just to find something to be down on the U.S. economy.

My investment strategy conclusions also remain largely unchanged. I like U.S. equities, but I don't like bonds. I am more positive about gold, because I believe that geopolitical instabilities, strengthening growth in developed economies, and some central banks' asset diversifications will support gold prices.

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia. *****

“Bachelor Pad Economics,” Aaron Clarey tells me about his new book in our latest podcast interview, is focused upon “maximizing your amount of time on this planet to spend on you and leisure and not be slaving away eighty hours at the office and just so you can afford that big mansion in the suburbs or the BMW SUV.” Clarey stresses the importance of minimalism in his financial planning. “Material wealth really doesn’t matter,” he tells me. “I’m the biggest capitalist there ever was. But truthfully, the only thing that really matters, the true source of happiness is other humans. And the great thing about humans is they’re free.”

Is it possible to enjoy America’s decline from your swank bachelor’s pad, knowing that you’re financially prepared to ride out the worst of the remaining years of the Obama era? Yes we can, shouts Clarey, the self described “Captain Capitalist” and “the only motorcycling, fossil-hunting, tornado-chasing, book-writing, ballroom-dancing, economist in the world,” in Bachelor Pad Economics. Clarey’s new book brings financial planning to the themes of his previous title, last year’s Blogosphere hit, Enjoy the Decline.

During our nearly 19-minute long interview, Aaron will explore:

● The only source of happiness in a period of national decline.

● What is the chief underlying cause of American decline?

● The importance of minimalism as a financial strategy.

● How did Aaron make the jump from financial analyst to new-media maven?

If the above Flash audio player is not be compatible with your browser, click on the video player below, or click here to be taken directly to YouTube, for an audio-only YouTube clip. Between one of those versions, you should find a format that plays on your system.

Transcript of our interview begins on the following page; for our many previous podcasts, start here and keep scrolling.

MR. DRISCOLL: This is Ed Driscoll for PJ Media.com, and we’re talking today with Aaron Clarey, the self-described Captain Capitalism, who blogs and podcasts at Captain Capitalism.blogspot.com, is the author of the 2013 Blogosphere hit Enjoy the Decline, and is the author of the new book, Bachelor Pad Economics. And Aaron, thanks for stopping by today.

MR. CLAREY: Thanks for having me, Ed.

MR. DRISCOLL: Aaron, most financial and self-help books have rather grandiose titles dating back to Napoleon Hill’s classic 1937 book Think and Grow Rich. In contrast, Bachelor Pad Economics, at least going by its title, sounds like a more modest approach to finances. So what constitutes the economics of the bachelor pad?

MR. CLAREY: Well, there’s several traits or qualities, I guess, or strategies. But probably the most important one, or the underlying one, is minimalism. And the reason I start focusing on minimalism is not just because I was brought up poor and it was by force, but as time goes on, especially in the Western civilization we rely on stock markets and capital gains and stock valuation for our retirement, you have a bubble with primarily baby boomer retirement dollars driving up the price of stocks. And so when they withdraw their money, I foresee at least a stagnation in stock prices in terms of real rates of return.

And that is going to put the onus or put the focus on personal budgeting and cost control and spending as little as possible. So there’s that financial aspect.

And then the other aspect or minimalism that kind of underlines the book is that material wealth really doesn’t matter. I’m the biggest capitalist there ever was. But truthfully, the only thing that really matters, the true source of happiness is other humans. And the great thing about humans is they’re free.

So, you know, your family, your friends, your loved ones, those people willingly hang out with you and are going to provide a higher rate of return, a higher quality of life than a Ferrari or anything like that.

So Bachelor Pad Economics is ‑‑ you know, there’s certain other aspects like the education and career and all this other stuff, but it is focusing on maximizing your amount of time on this planet to spend on you and leisure and not be slaving away eighty hours at the office and just so you can afford that big mansion in the suburbs or the BMW SUV.

MR. DRISCOLL: Your Twitter profile describes you as “the only motorcycling, fossil-hunting, tornado-chasing, book-writing, ballroom-dancing, economist in the world.” Could you talk about your background in economics and how you made the jump to writing and new media?

MR. CLAREY: It was all accidental, truthfully. I majored in finance at the University of Minnesota and ended up becoming credit analyst. And kind of to the buildup of the housing bubble, it wasn’t accounting or financial statements that was where the threat was coming from. The threat was coming through valuations, through loan-to-values, through economics. And I had minored in economics. I always loved economics and it was my original major, but it just wasn’t practical in terms of employment.

However, as the housing bubble grew larger and larger and larger, I was forced more and more into analyzing the economy and housing market than I was people’s financial statements or companies’ income statements. And that kind of sent me on another trajectory where the next bank I worked at had me more in a role of an economist. And then I also wrote a book about the housing bubble. And that along with just banking being just so horrendously corrupt and inept, I couldn’t tolerate it anymore.

And slowly but surely, my writing career ended up taking off, especially with the advent of the Internet and Amazon. And yeah, when it came down to the choice, [I thought], do I want to blog and write from my laptop on a beach or at Yellowstone National Park, or while I’m riding a motorcycle up to Alaska? Do I want to do that, or do I want to sit in this cubicle analyzing financial statements?

So I cut the string about, oh, two years ago, and have not looked back.

MR. DRISCOLL: The timing of Enjoy the Decline, your previous book, was excellent, coming as it did in early 2013, shortly after Americans voted for another four years of Mr. Decline himself, Barack Obama.

Let’s break the title down to its two halves, particularly since you expand upon these themes in the new book, Bachelor Pad Economics.

Could you start by explaining how America wound up in its current period of decline?

MR. CLAREY: Yeah. Basically, the quality and caliber of the people has declined. You look at people today ‑‑ you know, a perfect example to me, going around the Internet there’s a picture of a World War II vet who is 26, and then a picture of Pajama Boy, who is 26. And that basically sums it up right there.

The country is only going to be as good as its people. You’re going to get the government you deserve. And that’s where the decline comes in. So that’s the primary thing.

And then the symptoms that you see are government debt, government deficits, spending per pupil. [In] Glenn Reynolds’ new book, he’s got some great charts in there showing that spending per pupil adjusted for inflation has gone up four-fold, but the performance has stagnated. All these things show that it’s the Roman Empire version 2.0. And that’s where the decline aspect comes in.

MR. DRISCOLL: And if America is in a protracted, possibly irreparable, period of decline, what are some ways to enjoy it?

MR. CLAREY: Well, the first thing is to accept reality. And Enjoy the Decline doesn’t parallel perfectly the five or six stages of grief, but it’s the same process. Everyone grew up with the United States. We love it. And we were told what to believe, Ronald Reagan, rah, rah, rah, all that other stuff. But the key to enjoying it is to first accept reality. Because if you live in denial, every decision you make based on that denial is not going to be effective.

So we first have to realize that the United States is at least in a declining state or at minimum, stagnation. The prospects do not look good for the future. I don’t see us turning around. And you have to also admit that no matter what, the United States is not special. Every empire collapses. Every one throughout the history of the world does.

So you got to say, okay, I’m here and alive now. I don’t want to believe in flowers and puppies and unicorns. So given that the United States is in decline, what decisions can I make that will still make the best of a bad situation?

MR. DRISCOLL: Well, you mentioned Glenn Reynolds’ books on the higher education bubble. Do you recommend spending large amounts of cash for higher education and advanced degrees, majoring in arcane subjects to get ahead in the 21st century America?

MR. CLAREY: Not ‑‑ not arcane subjects. If you want to become a surgeon, maybe. And even with Obamacare, that’s doubtful. But it really does depend.

I had another book called Worthless that was basically the young person’s indispensible guide to choosing the right major. And it really does depend. It’s very simple. Ask people what they want to buy, what they want to purchase, what they’re going to purchase, and then go major in something that builds that. That’s how simple it is.

So if you want to major in English in an English-speaking country, that’s pretty stupid. If you want to major in feelings and emotion or you want to major in your skin color, or your ethnicity ‑‑ Chicano-American studies [for example], that’s stupid.

But if you want to major in chemical engineering, electrical engineering, stuff like that, [then] yes, it’s worth spending the money, but get your bang for your buck. I don’t know how people can think dropping six figures on a master’s or an advanced degree in the liberal arts is wise or sane.

MR. DRISCOLL: What role does real estate play in Bachelor Pad Economics?

MR. CLAREY: Ed, it’s kind of a love-hate relationship, and it really depends on the individual. If you’re a family man, yeah, you probably want to get a house if you’re going to raise a family. Some people can do the corporate thing. I can’t do the corporate thing. I just can’t. I’m too independent-minded and I’ve got two hemispheres of a brain.

But for those people who can reliably be employed for 20 years, 30 years, the life of a mortgage, sure, go ahead and get housing. But at the same time, realize that local governments are just as socialist or trending socialist as the federal and state governments. So you’re buying the right to pay property taxes. And in some towns, especially like Detroit and Minneapolis, Chicago, the property taxes get so high, that you’re paying more on property taxes than you are principal or amortization on your — on your mortgage.

But outside of the family man, living in pretty conservative suburbs and rural areas, I really don’t like real estate in terms of an investment, because especially as a bachelor, especially if you’re going to be doing the minimalist route, a house is just pointless, especially with telecommuting and everything nowadays. You’re anchored to that property. I think Peter Schiff and I share some of the same views of this. You’ve got to maintain the home. It just isn’t worth it.

It is so much easier and so much freeing of your life to rent and have a landlord deal with the maintenance issues and everything else, than becoming a homeowner. So it really does depend on the individual and what you want to achieve in life.

MR. DRISCOLL: Well, given the title of both books, what is the relationship of having kids and having financial freedom?

MR. CLAREY: A negative correlation.

MR. DRISCOLL: Okay.

MR. CLAREY: Not necessarily ‑‑ I mean, financial freedom is one thing, but happiness is a completely different ball of wax. Kids are humans, and they’re probably the single-most source of happiness and joy that loving, good parents will ever have. And they can also be the worst experience ever, if you’re not prepared to raise them.

But definitely in terms of money, absolutely, children are the number one cause of poverty. That’s just a fact. And if you have a kid, well, your income per capita has immediately dropped by half.

I’m not saying don’t have kids. I know people that have kids, and they’re wonderful kids and [when I see them], I kind of say, god, maybe I should [have kids].

And then I see the crying, screaming kids that are throwing rocks through windows, and they’re my windows. And I’m like, get that kid out of here before I call the child services. And so again, it does depend on the individual and what they want in life.

MR. DRISCOLL: Aaron, I believe that both of your recent books rather infamously reference “the Smith and Wesson Retirement Plan.” Most of us would rather not, to quote Pete Townshend, “fire the pistol at the wrong end of the race.” While recommending much about Bachelor Pad Economics, in a post at PJ Media earlier this month, Dr. Helen Smith, who helped champion your books, took strong offense at your suggestion. Could you elaborate on your reasoning?

MR. CLAREY: Well, the reasoning is economic. And it is secular. I won’t deny that. So people who are religious or even traditional, they obviously would be against that. And I take no umbrage and no offense to it.

But from a purely economic point of view, and even a humanitarian point of view, there are some times where you’re terminally ill — pick your poison: cancer, a brain tumor, whatever. And you’re not coming back, you are going to die, and the remaining two weeks, three months, whatever your life, are going to be absolutely in pain and misery.

I think it’s wise or humane or ‑‑ what’s the word I’m looking for ‑‑ compassionate to, you know, somehow kill yourself, not necessarily with a Smith & Wesson, but some kind of euthanasia. And it not only puts you out of your misery, but it also saves a ton of money. I mean, I forget what the statistics are, but a plurality of your health expenses are incurred in the last six months of life.

So you want to talk about, you know, saving your family the grief of watching you just decay and, whatever, mentally, physically, what have you, or be in pain; not to mention save the finances for a future generation. It’s not for everybody. I’m not saying you have to do it, I’m just saying it is an option.

MR. DRISCOLL: Well, barring that approach, how would you recommend planning for retirement in today’s economy?

MR. CLAREY: Oh, it really depends. I would get some money outside of the United States so it cannot be confiscated like Argentina or Cyprus. I would definitely contribute to a 401(k) and an IRA, even though I’m not a big fan of retirement plans.

And especially if, let’s say, in your 401(k) or 403 you have a match. Absolutely, because that’s free money. But then maybe have some exposure in property. Not necessarily something that you’d live in, but through a real estate investment trust, because real estate is a pretty good hedge against inflation, and it does grow with the population, as long as your population is growing. At least there’s some intrinsic value there. I also recommend having gold and silver, not necessarily for investment purposes, but more inflation insurance reasons.

But then, in terms of other asset groups, there really isn’t a lot of growth. I mean, it’s not just the United States baby boomers that are retiring, but boomers of all the western nations where most of the capital is. And these retirement dollars have driven up stock valuation everywhere. This is why your dividend yield is like a paltry two percent. This is why ‑‑ well for other reasons, the Central Bank and your government bond or your saving account pays less than one percent.

So I don’t see a lot of hope. I don’t see a lot of up and coming economies. I mean, maybe Singapore, Malaysia, Hong Kong, for a safety bet. But that would be more like investing in a blue chip stock. You’re really not going to have a ton of twenty percent annual gains over the course of ten years.

MR. DRISCOLL: And speaking of bachelor pad-related questions. I have to ask, how did the photos of various lovely young women reading your books appear on your Web site?

MR. CLAREY: The ‑‑ wait. Which ‑‑ the ladies? Which one ‑‑ are you talking ‑‑ oh, the models?

MR. DRISCOLL: There’s the photo that’s currently on the right-hand sidebar of your blog, of a very attractive young woman reading ‑‑

MR. CLAREY: Oh, yeah! Well, I have friends of the female persuasion. And let’s say ballroom dancing and knowing how to salsa helps. And watching Victor Borge, Walter Matthau movies and Cary Grant movies, and maybe plagiarizing some of their sayings and words, and building up some charm, might have a say in that. But yeah, most of them are friends. All of them are friends. And we’ll leave it at that. They are friends.

MR. DRISCOLL: Your blog makes several reference to the “Manosphere.” I what the Blogosphere is, but what is the Manosphere?

MR. CLAREY: Well, the Manosphere is kind of…I’m not trying to tout it, but it’s just the truth. It’s this up and coming backlash to feminism, I guess, is the best way to put it. You’ve had, essentially, two-and-a-half generations of men brought up without dads. Even if the dad was present, they’ve been emasculated. I’m trying to be succinct with my description.

Basically, boys like girls, men like women. It’s probably the most important thing in our lives, especially when we’re younger. And the amount of lies and baloney we were fed about how to approach women, the nature of the sexes, blah, blah, blah, is wrong. It was all couched in feminism or heavily influenced by ‘60s, ‘70s feminism.

The Manosphere is basically the older brother or the father you never had, who says, all right, look junior, here’s the deal. No, girls don’t like nice, sweet men. They don’t like it when you write them poems; and they don’t like it when you give them flowers. They like it when you hit the gym, lift weights, show up on your motorcycle, and then don’t call them back for a week. It may not be pretty. It may not be nice. It may be completely politically incorrect. But it’s truth. It’s reality.

And so you have a lot of guys who are now turning to this older brother kind of Manosphere where you compare notes. Say, hey, did this work? No. Did that work? No. Did this work? Yeah, that worked.

So I got an entire chapter about girls, and it’s heavily influenced by the Manosphere, especially in terms of sexual market value. So we apply some economics there to describe the dynamic and the relationship between men and women, and specifically and practically how to use that to your advantage to woo the young ladies.

MR. DRISCOLL: And Aaron, last question: Your books are predicated on this nation being permanently hosed. Is that a reasonable assumption, or is there any hope for America yet?

MR. CLAREY: Oh, there’s always hope. I see some glimmers of hope. For example, and this gets, again, to the Manosphere. You could say I’m crass and direct and blunt and very politically incorrect. A disproportionate amount of my readership and viewership for my blog and my podcasts or my YouTube channel ‑‑ are minorities, especially black males and Hispanic males.

And the reason there’s hope is because these guys are sick and tired of being lied to their entire lives by primarily leftist politicians. And here’s a guy who’s like, hey, you know what? I don’t care about your feelings. I don’t care about your race. Here’s how it is. This is why you’re poor. Here’s a practical way to get out of it.

And I have a very loyal following from minorities. So when I see a lot of the Hispanic and black males becoming even more conservative, more libertarian than I am even, that kind of gives me hope.

But in general, that’s a niche of the Blogosphere that I’m in, where I see some hope. But my books are predicated on the U.S. collapsing, because if the U.S. didn’t collapse and it boomed, well, that’s not hard to adapt to. You just enjoy the incline. But what does take some doing is learning how to maximize your utility, enjoy your life to the limits, in a poor environment.

MR. DRISCOLL: This is Ed Driscoll and we’ve been talking today with Aaron Clarey of Captain Capitalism.blogspot.com and the author of the new book Bachelor Pad Economics. And Aaron, thanks for stopping by PJ Media.com today.

A picture of late drug trafficker Pablo Escobar is hung from a wall inside the Napoles... Read More

Even international drug traffickers need investment advisers.

That was Robert Mazur’s job when he went undercover for the U.S. government in the 1980s and ‘90s. Posing as a Mob-connected businessman, he helped the Medellin drug cartel launder and invest its suitcases full of cash.

His clients were “the biggest crooks in the world,” says Mazur, author of "The Infiltrator: My Secret Life Inside the Dirty Banks Behind Pablo Escobar’s Medellin Cartel.” Yet they “always told me that they don’t gamble,” Mazur says. “They don’t take risk, which is why the stock market was of absolutely no interest to them.”

Wait, criminals don’t like risk? Murder, drug trafficking, fraud and bribery -- all okay. But propose buying them shares of Twitter or Tesla, and they freak?

Investing, by definition, means trusting others. You must believe chief financial officers aren’t cooking the books and rely on people like Mark Zuckerberg to make smart use of the billions at their disposal. For criminals who thrive on taking advantage of trust that’s not an easy sell.

Convicted felon Sam E. Antar says stock-picking -- trusting in people and numbers you can’t directly verify -- sets you up as a mark for the unscrupulous. Antar was the chief financial officer of Crazy Eddie, Inc., an electronics chain led by Sam’s cousin, Eddie Antar. The chain collapsed under the weight of its fraud in 1989. “Investors live on hope and it’s the criminal’s job to take advantage of that hope,” Antar says.

The fact that he got caught is no consolation, Antar says. Regulators and investigative reporters have been losing the resources to uncover fraud. He points out, correctly, that the number of FBI white-collar crime prosecutions has fallen by half since the 1990s. Antar now speaks on white-collar fraud, often to law enforcement groups, runs a website on the topic and consults for law firms suing on behalf of investors.

“If I wanted to be a scam artist today, I could be very, very successful,” he says. “I’d probably have less risk of being prosecuted and far less risk of going to prison.” But as he also points out, criminals are as short-sighted as the rest of us, maybe more so. “Nobody ever plans on failure,” he says. “The prisons are full of people who never planned on being there.”

The Federal Reserve's massive bond buying and near-zero-interest-rate monetary policy has set up the stock market for a big fall, said Jim Grant, founder and editor of Grant's Interest Rate Observer.

"My fear is because that interest rates are suppressed, therefore earnings are inflated," he told CNBC's "Squawk Box" on Monday. "So when rates go up … the 'hall of mirrors' is shattered and we look at each other and see what actually is real rather than what the Fed wants us to believe."

If it were up to him, Grant said, the Fed would not have intervened at the time of the 2008 financial crisis because the markets and wages should have been given a chance to hit rock bottom.

The major measures of activity were mixed in February, while most remain above 50.The employment index slipped to 47.5 from 56.4, the lowest reading for the index infour years, while the business activity index fell to 54.6 from 56.3. The supplierdeliveries index moved higher to 53.0 from 52.5. The new orders index rose to 51.3from 50.9.

The prices paid index declined to 53.7 in February from 57.1 in January.

Implications: After a surprise on the upside from the ISM manufacturing report,today&rsquo;s ISM service sector report surprised to the downside. Although, at51.6, the report still showed expansion in the service sector, the report came inbelow consensus expectations. The business activity index &ndash; which has astronger correlation with economic growth than the overall index &ndash; dipped to54.6, a level that continues to signal solid economic growth. The worst news intoday's report was an 8.9 point decline in the employment index, to 47.5. Afterhitting a three year high last month, the employment index now stands at its lowestlevel since March of 2010. Many of the industries reporting a slowdown inemployment; mining, real estate, and entertainment &amp; recreation, to name a few,were hit hard by continued unusually cold (and snowy) weather. As the cold seasoncomes to an end, expect employment in these industries to pick back up as companiesand consumers make up for lost time. On the inflation front, the prices paid indexdropped to 53.7 in February from 57.1 in January. Still no sign of runawayinflation, but given loose monetary policy, we expect this measure to move upwardover the coming year. In other news this morning, the ADP index, a measure ofprivate payrolls, increased 139,000 in February. Plugging this into our payrollmodels brings our forecast for the official report on Friday to 151,000 nonfarm,150,000 private. (Tomorrow&rsquo;s report on unemployment claims may alter thisforecast slightly.) In other recent news, sales of autos and light trucks increased0.7% in February but were unchanged from a year ago. Look for faster gains in themonths ahead as buyers make up for shopping days lost to bad weather.

Retail sales increased 0.3% in February (-0.2% including revisions for December/January) versus a consensus expected 0.2% gain. Sales are up 1.5% versus a year ago.Sales excluding autos also rose 0.3% in February (-0.1% including revisions to prior months). The consensus expected a 0.1% gain. These sales are up 1.3% in the past year.

The increase in sales in February was led by non-store retailers (internet and mail-order).

Sales excluding autos, building materials, and gas increased 0.3% in February (-0.2% including revisions to prior months). If unchanged in March, these sales will be down at a 1.8% annual rate in Q1 versus the Q4 average.

Implications: Today’s retail sales report shows that as the harsh winter weather starts to ease, the consumer is starting to venture out again, or at least buy more on-line. After falling in December and January, overall retail sales increased 0.3% in February, narrowly beating consensus expectations. According to Planalytics Inc., December was the coldest in five years and had snowfall 21 percent above normal. According to NOAA, the US experienced the coldest population-weighted January in the past twenty years. No wonder sales of autos over the past three months are down at a 15% annual rate while sales from non-store retailers (internet/mail-order sales) are up 5.3%. “Core” sales, which exclude autos, building materials and gas, rose 0.3% in February. Over the next few months, expect consumer spending to rebound sharply from weather-related problems. Also, the underlying trend in consumer spending should improve due to growth in wages, growth in total hours worked, and a very low debt burden on consumers. Given today’s retail report as well as reports on inventories and the service sector, it now looks like the third report on GDP in Q4 will show a growth rate of 3.0% versus a prior estimate of 2.4%. If so, real GDP was up 2.7 in 2013 (Q4/Q4) a big improvement from the 2% growth rate in both 2011 and 2012. In other news this morning, new claims for unemployment insurance declined 9,000 last week to 315,000. Continuing claims for regular state benefits dropped 48K to 2.86 million. It’s still early, but our payroll models are tracking March gains of 196,000 nonfarm and 198,000 for the private sector. On the inflation front, import prices increased 0.9% in February but are down 1.1% from a year ago. Oil led the price gains in February, up +4.4%. Excluding petroleum and petroleum products, import prices were up a more modest 0.2%. Export prices increased 0.6% in February but are still down 1.3% from a year ago. Excluding farm products, export prices rose 0.7% in February but are down 0.7% from a year ago.

The number of native-born, working-age Americans who aren’t working has shot up by almost 9 million since 2007, and by almost 15 million since 2000, according to a new report by the Center for Immigration Studies, an anti-immigration group.

By late 2012, roughly 50 million native-born working-age Americans weren’t working, up from 40 million in 2000, according to the March 13 report, titled “Still No Evidence of a Labor Shortage.”

The army of idle Americans is important for the immigration debate, because advocates for greater immigration say foreign workers are needed to fill slots that can’t be taken by Americans.

The 50 million idle Americans include many who are studying, have chosen not to work or have retired early.

But the government data shows that 16.7 million native-born Americans wanted — but did not have — full-time work in 2013, up from 10.5 million in late 2007, and 7.8 million in 2000.

These unemployment and underemployment numbers include all native-born Americans who sought work in the last few weeks, are working part-time while seeking full-time jobs, and those who are “marginally attached” to the workforce.

The rise in the number of unemployed Americans was accompanied by increased employment of immigrants.

The data shows that 23.8 million immigrants had jobs in 2013, up slightly from 23 million in 2007, and up sharply from 18.8 million in 2000.

The shift in employment patterns underlies the numerous polls that show rising opposition to any amnesty for illegal immigrants, and that show lopsided opposition to further inflow of immigrants and guest-workers.

A March 13 report by Gallup showed that only 4 percent of Americans regard immigration as the top problem facing the United States. The poll did not say if the four percent want more or less immigration. Unemployment and the economy was deemed most important by 36 percent of the 1,048 adult respondents.

The opposition to increased immigration may have played a role in the March 11 win by Republican Rep. David Jolly, who slammed his opponent after she supported greater use of migrant workers.

“We have a lot of employers over on the beaches that rely upon workers and especially in this high-growth environment, where are you going to get people to work to clean our hotel rooms or do our landscaping?” Sink told her audience Feb. 25.

Subsequently, Jolly ran a TV ad in the district, saying “on illegal immigration, I favor stronger borders. Not amnesty.” He won the district, even though he was outspent and 50.7 percent of the district’s voters pulled the lever for President Barack Obama in 2012.

The opposition to amnesty gives the GOP an opportunity to leapfrog over the Democrats, according to Sen. Jeff Sessions.

“Republicans have a choice… [because they] can either join the Democrats as the second political party in Washington advocating uncontrolled immigration, or they can offer the public a principled alternative and represent the American workers Democrats have jettisoned,” he wrote in a March 13 article, titled “Becoming the Party of Work.”

“Republicans can either help the White House enact an immigration plan that will hollow out the American middle class, or they can finally expose the truth about the White House plan and detail the enormous harm it will inflict,” he wrote.

“Is it not time for the GOP to make a clean public break from the special-interest immigration lobby and let Democrats own — solely, completely, and exclusively — the unwise and unpopular policies they are pushing on these groups’ behalf?” said Sessions, who may be preparing for a presidential run.

“The heart of the GOP’s pro-worker, pro-middle-class agenda should be a bold reforming of our welfare system… [and] should be combined with a series of conservative policies all united by that common theme: shrinking the welfare rolls and growing the employment rolls,” he said.

WASHINGTON (Reuters) - The millions of Americans suffering through long stretches of unemployment could be left behind as the economy strengthens, a study by an influential former White House economist found.

Alan Krueger, a respected labor market economist who led President Barack Obama's Council of Economic Advisers, said those unemployed long term tended to put less effort into their job hunts than others and were often viewed by employers as undesirable.

The sobering analysis published on Thursday by the Brookings Institution, a think tank in Washington, projected that people out of work for more than six months will increasingly give up their job search in the coming years.

Their plight could be one of the deepest scars left by the 2007-09 U.S. recession.

While the unemployment rate has fallen quickly over the past year, most of the workers getting jobs have experienced only brief stretches of unemployment.

It has yet to be seen whether the long-term unemployed will eventually get jobs as the economy strengthens or drop out of the labor force altogether. Krueger's analysis suggests America is headed towards the latter of those two paths.

"A concerted effort will be needed to raise the employment prospects of the long-term unemployed, especially as they are likely to withdraw from the job market at an increasing rate," Krueger wrote in the paper, which was coauthored by his Princeton University colleagues Judd Cramer and David Cho.

In February, there were 3.8 million people without jobs who had been actively looking for work for at least 27 weeks, nearly three times more than on the eve of the recession.

Krueger and his coauthors found the long-term unemployed were especially prone to dropping out of the workforce. While that pattern is suppressed in the aftermath of recession, the researchers concluded it would reassert itself in coming years.

It also appears unlikely a strengthening economy will benefit the long-term unemployed much. The researchers found that even in states with low jobless rates such as North Dakota, where the economy is booming thanks to surging oil output, the long-term unemployed don't seem to be doing any better.

The paper also suggested the U.S. Federal Reserve would do better to monitor the dwindling ranks of short-term unemployed than the overall jobless rate when trying to gauge when a tightening labor market might fuel inflationary wage pressures.

The research supported the growing view among economists that those out of work for an extended period don't suppress wage growth much, perhaps because they aren't trying very hard to get jobs or aren't seriously considered when they apply.

That means there could be less slack in the job market than would be suggested by the current unemployment rate of 6.7 percent. The number of short-term unemployed workers has fallen quickly in recent years and is now at roughly the same level as it was in 2004.

"Further declines in short-term unemployment would be expected to be associated with rising inflation and stronger real wage growth," the economists wrote.

While this view has gained currency among academic economists, Fed Chair Janet Yellen on Wednesday said recent evidence supporting this conclusion was far from conclusive. She said she remained concerned about people who gone for long stretches without work.

I'll add that I am convinced the precious metals market is being kept artificially low, and has been for some time. There is absolutely no rational economic reason for gold and silver prices to be FALLING now. See below:

While certainly governmental manipulations are quite plausible with regard to gold and silver, there most certainly are rational economic reasons for gold and silver to be declining:

a) the prospect of rising interest rates. G&S do not pay interest. When interest rates rise, on the margin there will be sellers. Gold's precipitous decline in the late 70s is a strong example of this at work; or

b) the failure of promises of accelerating inflation for the last several years

PS: Once again, I point out that I post Wesbury not because I agree with him on everything, but because he has been a FAR better market prognosticator over the last several years (and that is one of the themes for this thread) than any of us. IMHO it is wise to consider opinions with which one does not necessarily agree.

I do not dispute your statements regarding the current declining gold price from a short-term, rather myopic perspective. However - I think if one honestly takes a long-term, more comprehensive view of the current situation with regard to the massive expansion of the US money supply, our wholly unprecedented and rapidly expanding debt, and the fact that China and Russia are in the process of moving away from the US dollar as a reserve currency (all of which Wesbury, et. al. either refuse to acknowledge or dismiss as no big deal) it's clear to me that the price of gold and silver in real terms ought to be two to three times - maybe even higher - its present level. The US dollar is of value now ONLY because of its reserve status. Once that collapses, so will its value - RAPIDLY.

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"You have enemies? Good. That means that you have stood up for something, sometime in your life." - Winston Churchill.

However when you say " There is absolutely no rational economic reason for gold and silver prices to be FALLING now"

a) your use of the word "now" would seem to mean "the short term"? yes?

b) whether you or I agree or not, there are reasons, which I listed, why G&S would be falling now.

I would re-emphasize that the prospect of higher interest rates e.g. due to the dollar's reserve status being threatened, certainly is a very strong factor against gold prices rising and indeed, as in the late 70s, could very well trigger a sharp decline-- the exact opposite of what you deny to be even possible.

With our collective track record on this subject, humility would seem to be appropriate for us.

I never denied anything to be possible. I'm simply stating my educated opinion. I also agreed in my last post that your analysis (in the short term) is rational. I'm not one to gamble and try to profit from short-term moves in any market. I have always been oriented toward the long-term, and fundamentals, rather than technical analysis or short-term movements.

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"You have enemies? Good. That means that you have stood up for something, sometime in your life." - Winston Churchill.

Crafty - No, saying there is no rational economic basis means that, while something may in fact be happening, it is not consistent with a rational long-term analysis. Lots of irrational things happen in markets on a short-term basis. I don't buy into the B.S. that I was taught in college business courses that the market incorporates all available information accurately and behaves accordingly. That's what I meant to convey. Sorry for the lack of precision.

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"You have enemies? Good. That means that you have stood up for something, sometime in your life." - Winston Churchill.